The economic crisis has hit automakers all around the world, and although manufacturing plants are already taking drastic cost cutting action, Honda Motor Company has spear-headed the UK’s effort by slashing production of the three- and five-door Civic by 22,000 units, or about 10 percent from the 228,000 units it had planned. This is despite the recent announcement that its new Jazz will be built alongside the Civic at its Swindon plant.
Honda CEO, Takeo Fukui, is upbeat on the move even though the Japanese manufacturer has seen global profits decline during the year. Honda’s global operating profit fell 48.0 percent to $1.38 billion and sales dropped 4.9 percent $26.18 billion.
Nissan has also taken dramatic action and said it would halt production at its Sunderland plant for two weeks and shorten working days for three weeks between late October and November due to a slide in sales of the Micra and Note models. European Executive Vice President Carlos Tavares, said earlier this month that Nissan was still on track to meet its sales target of 3.9 million vehicles this year. Despite the gloomy picture Nissan’s global sales were up 5 percent in the first half, against an annual growth target of 3.5 percent.
This comes as Ford Motor Company denied filing for bankruptcy. During the first half of 2008, Ford U.S lost $8.6 billion, and analysts expect further losses in the third and fourth quarters. In May, Ford abandoned its plan to restore profits in 2009. Since 1995, the company has shed U.S. market share annually. This year, its sales have plunged 18 percent. CEO, Alan Mulally, declined to say if he will cut more jobs or shut more U.S plants as sales continue to fall and the economy worsens. He said he is unable to talk about that because Ford is in the so-called quiet period between the end of the third quarter and the release of its results on November 7th. “People aren’t going to buy cars from bankrupt companies when they have great choices” Mulally says.
With the crisis worsening, VW owned Seat is yet another manufacturer cutting production by 5 percent starting in November following a deep plunge in its core domestic market, Spain. This comes on the back of its new premium model, the Exeo, joining the 2009 line-up which Seat hope will boost sales amidst falling demand. A corresponding agreement that for the moment lasts until the middle of next year was reached with its unions recently. Spanish new car sales have fallen sharply this year, dropping 40 percent in August alone, and little improvement is expected due to a real estate crisis. “It did not look much better,” a spokesman for Seat said, when asked about the month of September.
The announcement of General Motors that its global sales fell by 11.4 percent in the third quarter, and it having been hurt by weak demand in North America and growing economic pressures in Europe, couldn’t have come at a worst time. GM’s global sales fell to 2.1 million, with sales in North America, its largest market, down 18.9 percent. This comes as the US government has been asked for a $10 billion rescue package as GM try to merge with Chrysler. The merger funds would also be in addition to an already approved $25 billion programme to provide low-interest loans to the industry for retooling to make more fuel-efficient cars.
Industry analysts are predicting at least a 2 year slump in global car production as the global economic crisis seeks out unsuspecting victims.